Happy staff

Happy Staff

Financial Wellness in the Workplace

Financial stress can impact many areas of life, including work. Thus, financial wellness in the workplace should be a priority for your business. The term ‘personal finances’ is taken too literally. While the financial situation might refer to an individual, personally, the effect of that situation extends to more than just one person. The responsibility for improvement presents employers with a big opportunity to implement financial wellness programs. These will enable employees to achieve financial health and life balance and create a workforce of happy staff.

In a time when many businesses are optimising their spending and bonuses and competitive salary increases are rare, employers can look to reward staff by investing in employee financial wellness. This service would be a fraction of the cost of normative bonuses. But the long-term gain might be more financially beneficial to staff than the bonus ever would. (I am not saying don’t give bonuses. Everyone loves a bonus. I’m saying that if you feel like you cannot afford a bonus, here is an alternative option.)

In this article, I will present 7 reasons for employers to invest in the financial wellness of their staff.

Happy staff
Working together
Happy staff

Why financial wellness in the workplace is important

Most people have little financial knowledge, beyond understanding the basics. As a result of this, they experience financial angst when having to make financial decisions. As an employer, it is advisable to get an understanding of your employees’ financial literacy.

Many companies have seen the positive impact on employee happiness of having Discovery vitality days and mental wellness days at office. What about financial wellness at work? Holistic financial wellness.

Currently, millennials constitute most of the workforce. It’s commonly known that this generation has serious financial constraints which include student loans and debt. And Gen Z’s are hot on their heels.

For the younger new recruits, many are earning an income for the first time. Think about how the temptation of spending and living from paycheck-to-paycheck can quickly result in employees increasing their standards of living with each pay raise, as opposed to increasing their savings.

Offering financial education to younger staff ensures that they have access to information when it is most relevant to them. By improving their knowledge, skills and confidence with money you’ll have happy staff who are better able to manage debt and save for emergencies and retirement.

Financial wellness in the workplace implies that employees know how to manage their money. This type of employee engagement gives staff the capabilities to set short and long term financial goals, to be mindful with spending and saving and to invest wisely. Behaviours and thinking around personal finances reduces employee financial stress. These services should be an integral part of company culture as it provides the company with several benefits.

Improved productivity

Most workers are stressed about their overall finances and many report that these financial problems are a distraction at work

Financially unstable or insecure employees have low productivity and efficiency in the workplace. An employee who is stress-free and engaged is likely to be more productive and bring value to a team, compared to a financially stressed employee.

Financial security gives staff confidence. And confident staff typically perform better than those who lack confidence. A lack of self-confidence makes it hard for unique talents to shine through.

A 2014 survey by the Financial Planning Standards Council ranked money as the greatest source of stress, higher than health, work or family obligations

It is worthwhile investing in the financial wellness of staff as it will provide stability to the business and keep employees happy. Employees will feel appreciated and motivated. This will ultimately translate into higher productivity and better results for the business.

Improved workplace morale

Happy staff

The inability to make responsible financial decisions will likely cause financial problems which can create anxiety, depression and sleeping disorders from continuously worrying about money, savings and impending retirement.

Furthermore, if employees are prepared for retirement, there is no need for them to work beyond retirement age, unless they want to. Financial wellness programs in the workplace have been shown to lead to higher employee participation rates in retirement savings plans.

Having staff who are in control of their financial situation can help remove a lot of the stress and anxiety associated with mental health. Having happy staff improves workplace morale which has a knock-on effect throughout the organisation.

 

The inability to make responsible financial decisions will likely cause financial problems which can create anxiety, depression and sleeping disorders from continuously worrying about money, savings and impending retirement.

Furthermore, if employees are prepared for retirement, there is no need for them to work beyond retirement age, unless they want to. Financial wellness programs in the workplace have been shown to lead to higher employee participation rates in retirement savings plans.

Having staff who are in control of their financial situation can help remove a lot of the stress and anxiety associated with mental health. Having happy staff improves workplace morale which has a knock-on effect throughout the organisation.

Happy staff

Improved business profitability

Having staff with the education to understand how to maximise their personal finances is likely to spill over into their ability to deliver this for your business as well. Once financial astuteness is embedded, staff will begin to understand workplace finance. 

Consider the positive impact of a workplace consisting of happy staff who understand the importance of reduced expenditure, efficient use of resources, and asset growth? How much easier would it be to explain why certain expenses need to be cut? When promoting financial wellness in the workplace you might well find that staff implement these strategies without you even asking. Wasteful expenditure will be a thing of the past with happy employees.

Happy staff

DECREASED ABSENTEEISM AND HEALTHCARE COSTS

Staff that have not made appropriate allowances for doctor visits and other medical expenses are more likely to spread illnesses or be absent from work. This creates a domino effect of increased employee sick days and healthcare costs for the business.

Healthy staff are happy staff. And healthy staff give energy to their work which further adds to the culture of heightened productivity.

Decreased absenteeism and healthcare costs

Staff that have not made appropriate allowances for doctor visits and other medical expenses are more likely to spread illnesses or be absent from work. This creates a domino effect of increased employee sick days and healthcare costs for the business.

Happy staff

Healthy staff are happy staff. And healthy staff give energy to their work which further adds to the culture of heightened productivity.

Improved company culture

One in five employees want financial guidance from their employer. When employers do not respond to the needs of employees, company culture suffers. By providing workplace financial education, employers are aiding staff to develop the skills to manage their financial situation and save for retirement.

The inability to make responsible financial decisions will likely cause financial problems which can create anxiety, depression and sleeping disorders from continuously worrying about money, savings and impending retirement. This lack of education limits the company’s opportunity to be known as a company that cares.

Receiving financial education via the workplace can often facilitate employees enrolment in automatic plans that are paid for and deducted from their earnings before paid out to them. The data on automatic enrolments show clear benefits. These should be an integral part of company culture.

Reduced recruitment costs

Financial anxiety not only impacts morale and productivity, but can influence staff retention and loyalty, as staff in financial trouble may leave for higher-paying employment, or worse – leave to cash in a pension or provident fund.

This translates into increased costs and time spent on recruitment and limits the company’s ability to attract quality candidates. The time and financial cost of investing in and training staff, just to see them leave the company, should also be considered.

In a Barclays study, 38% of employees said that they would move to a company which puts financial wellbeing as a priority. Furthermore, 1 in 5 said they would value broader financial guidance, debt management and financial counselling. Earn the reputation as a company who cares. This will attract higher quality candidates.

Less theft and fraud

Happy staff

On a more serious note, staff who are struggling financially may resort to stealing from the company. Being financially in control means that a big, unanticipated expense wouldn’t throw anyone off balance. But when situations like these befall those that are unprepared for them, desperation can lead to poor decision-making.

Pre-employment credit checks and screening won’t necessarily prevent this. Many people have healthy finances at first. But this can change. Research shows that if you plan for the future you are more likely to accumulate wealth no matter your level of income or other socioeconomic characteristics. And as employers, you can help your staff achieve this. Ensure that staff have the appropriate financial behaviour to not find themselves in alternative sticky situations.

On a more serious note, staff who are struggling financially may resort to stealing from the company. Being financially in control means that a big, unanticipated expense wouldn’t throw anyone off balance. But when situations like these befall those that are unprepared for them, desperation can lead to poor decision-making.

Pre-employment credit checks and screening won’t necessarily prevent this. Many people have healthy finances at first. But this can change. Research shows that if you plan for the future you are more likely to accumulate wealth no matter their level of income or other socioeconomic characteristics. And as employers, you can help your staff achieve this. Ensure that staff have the appropriate financial behaviour to not find themselves in alternative sticky situations.

Happy staff

Happy staff

In conclusion, financial wellness in the workplace results in happy staff. It facilitates better health, lower absenteeism, increased employee retention, lower health care costs, and increased productivity, morale and profits. It is worthwhile investing in a financial wellness program as it will provide stability to the business. Employees will feel appreciated and motivated. This will ultimately translate into higher productivity and better results for the business.

When considering financial wellness problems, employers must bear in mind that not every employee has the same issues and needs. Thus, a program which is tailored for the company’s benefits and the socioeconomic situation of staff is encouraged.

While classroom-based financial literacy sessions might teach staff about finances, they rarely translate into concrete actions that will change behaviour and their financial situations. Financial education programs need to provide staff with an understanding of their financial situation. Give them the tools to self-reflect and take charge.

Want to pin this post for later?

Do you know how financially literate your staff are?

Can you see the negative impact of financial insecurity on team members in the workplace?

Let us know in the comments below.

Do you have happy staff?

Interested in improving financial wellness in the workplace?

Do you know how financially literate your staff are?

Can you see the negative impact of financial insecurity on team members in the workplace?

Let us know in the comments below.

Do you have happy staff?

Interested in improving financial wellness in the workplace?

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1 Response
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About the Author

I am passionate about helping people understand their behaviour with money and gently nudging them to spend less and save more. I have several academic journal publications on investor behaviour, financial literacy and personal finance, and perfectly understand the biases that influence how we manage our money. This blog is where I break down those ideas and share my thinking. I’ll try to cover relevant topics that my readers bring to my attention. Please read, share, and comment. That’s how we spread knowledge and help both ourselves and others to become in control of our financial situations.

Dr Gizelle Willows



Dr Gizelle Willows

 

PhD and NRF-rating in Behavioural Finance